What Is An Enterprise License Agreement, And Does Your Business Need It?

Legalities can make businesses feel as if they’re drowning in red tape. Obligations pile up in every stage of the company, from its start to developing the new service, deployment, protection, and scale.

One area that has caused a lot of headaches for growing companies is licensing. Most start with the individual license agreements but soon enough find it challenging to keep up with them.

To combat that issue, they seek new solutions and find ELA but aren’t sure if that suits their needs.

Most people link enterprise License Agreements (ELA) with large conglomerates such as Microsoft and IBM, but its application is much broader.

What is ELA exactly, what does it include, how does it compare to the individual licenses, and how can organizations benefit from it?

1. What is an enterprise License Agreement?

Enterprise License Agreement (also known as ELA) refers to the contract between the licensor (vendor) and the entity that uses it (customer).

The agreement grants the customer to use the vendor’s service during a specific period defined in the contract. They are typical. Licensing lasts between three and five years.

Most vendors use ELA to license the use of their software for a discounted price if it’s being accessed over a more extended period, as well as to facilitate the extension of the agreement.

2. Individual Licenses vs. enterprise License Agreement

Enterprise License Agreement has been created to replace individual licenses. Compared to separate agreements, ELA makes the licensing more affordable and streamlined.

The first significant difference between ELA and individual agreements is in using a single license or having to add new charges on the go.

With ELA, one agreement has a fixed price and can be used for the entire organization.

The issue with individual agreements is that companies must manage every license and ensure they aren’t expired. This can disrupt the businesses that haven’t discovered deals that aren’t valid on time.

The service cost is also a significant difference for both vendors and customers. ELA allows discounts for entities that plan on using their services for years and months.

Another area in which it cuts the cost is in the waste.

Some licensing agreements will be used scarcely, and as businesses purchase more licenses, it’s inevitable for others to go to waste.

ELA offers bundles to reduce waste and decrease the number of new agreements. Licensing that wasn’t used for one part of the service is treated as a resource that can be used for other details of software licensing.

Not having to purchase additional individual licensing agreements also means it’s easier to plan the cost of the ELA services. Companies know how much the bundles will cost them in advance.

3. Benefits of Using ELA for Organizations

In a nutshell, some key benefits of using ELA for companies are that it:

● Facilitates the introduction of new technologies

● Can be combined with other services

● Simplifies management of licenses

● Lowers cost of the licensing

● Gets the product in the customer’s hands faster

● Saves you time

Other services can be integrated with the enterprise License Agreement. For example, you can choose the ELA combined with the ready cybersecurity solutions. It protects your company’s infrastructure from likely attacks and breaches under a single license.

Keeping tabs on which individual license has expired and whether it matches the new terms and changes in laws and policies can be time-consuming.

A single ELA license facilitates that process because the organizations don’t have to operate multiple scattered licenses and risk costly mistakes.

Considering the latest cybersecurity concerns that the companies have experienced since the rise of the cyberattacks, such services have proved invaluable when protecting their organizations.

The process of getting the license when a new employee joins the company has been longer with the individual agreements. Organizations would need a different document for every new member of the team.

With ELA, access to the software would be instantaneous for new workers because businesses already have a single license that allows it.

4. How to Include ELA in Your Business?

Companies that want to reap the benefits of this service should decide on predetermined rules for this licensing on an enterprise level.

Vendors and customers must be informed and agree to these rules before you start applying the ELA for licensing purposes.

To make the jobs of businesses more streamlined and more accessible, ensure that ELA includes:

• Possibility of an audit — both vendors and clients need to know that they can change the licensing based on their needs
• Track record of the service consumption — information that you get will enable you to budget for the ELA in the future
• Rules of how unused services can be allocated later — be clear on how can companies claim the credits (unused agreements) and use them for another part of the system
• The specific date when the ELA starts being valid — in which stage of the deployment should the enterprise be deemed as functional

5. ELA is a Necessity For Growing Companies

Having numerous individual contracts starts being an issue as a company grows. Scaling organizations use ELA to regain control and ensure they have an overview of licensing.

ELA reduces licensing costs and saves time on tasks such as managing multiple documents for businesses developing new solutions, and offering software as a service.

And as of late, it’s possible to integrate it with various security solutions that protect businesses from known and new cyber threats.

As a result, businesses have more time to focus on the organization’s more important and pressing tasks and offer safer, regulated, and streamlined products.